Remarks by the Vice President at the U.S. Chamber of Commerce Rally Supporting the
Bush Administration's Energy Plan

MR. DONOHUE: Thank you, Bruce. Good afternoon, ladies and gentlemen. I'd like to welcome you all here today, including the state and local Chambers of Commerce who are with us from 14 states, and representatives from Denmark, today. And also pleased to greet the hundreds of state and local Chambers who are joining us via satellite and the Internet, and a special welcome goes out to the few Chambers that are hooked up to participate directly with us in this process -- the California State Chamber of Commerce, the St. Louis Regional Chamber and Growth Association, the Missouri State Chamber of Commerce, the Pennsylvania Chamber of Commerce and Business and Industry, and the Wisconsin Manufacturers and Commerce.

Now, this is a great crowd from all around this country, Mr. Vice President, on the afternoon before a three-day weekend -- (laughter) -- and in good weather, I might point out. Now, the vice president is here today on a highly significant issue. As we know, the president of the United States delivered a major tax day speech to the country in this room last month, and today the vice president comes on the question of energy.

We're here because the energy situation in this country threatens our economic future and, indeed, our position of leadership in the world. To tackle this issue, the president turned to a man who has professional experience, deep understanding of how the government works, both on the federal and state level, and the integrity, the principle, and the diligence to get it done. This man has been a friend of the Chamber for a long time, a friend of the business community, and a friend of mine, and we're honored today to welcome the vice president of the United States, Dick Cheney.
(Applause.)

VICE PRESIDENT CHENEY: Thank you. Thank you very much. Well, thank you very much, Tom. I appreciate your kind invitation to come spend some time here today, and I especially appreciate the opportunity to speak to so many folks on behalf of the Chamber of Commerce and associated with Chambers out there all across the country.

It's truly a national issue we wanted to talk about today. It has the potential to affect the lives of all Americans, and we especially appreciate the willingness of the Chamber to get involved in these kinds of issues, to help people engage and help us take on some of these tough problems.

I was asked last January, really after about our fourth day in office after the inaugural, the president asked me to take on the responsibility of chairing a task force on energy. And we did that, put together a Cabinet committee and worked through the spring and, of course, here about two weeks ago actually released the details of our recommendations.

The background of that was that we were increasingly concerned and, as we talked to a lot of people whose views we respected, concerned that our lack of a national energy policy in fact constituted a threat to our long-term economic prosperity; that we needed to be able to develop a coherent national policy if we were going to avoid having at some point problems in terms of availability of supply, or price began to adversely affect important segments of our economy. And the president spoke during the course of the campaign last fall about the fact that if you look for a storm cloud out there on the horizon that could adversely affect our economic prospects, energy was it.

And of course, since then, since last fall now, we've seen the manifestation of that problem in California and in other aspects and problems that crop up from time to time both with respect to the availability and the price not only of electricity, but also of fuel.

As a result of that, and looking at the situation in California and elsewhere, we began to work trying to put together a long-term plan. It's clear that you cannot manufacture kilowatts overnight. It takes time to build the plants and build the infrastructure and to develop the capacity for that kind of thing. And I know there is a great temptation on the part of many, certainly a desire on the part of many, to have instant solutions to our problems. But in the area of energy policy in particular, one of the reasons we've had some problems today is because of short-sighted approaches in the past that geared sometimes around a political calendar more than they were around actually dealing with the problem long term. I think all too often in the past, government has really avoided stepping up and addressing the difficult issues, and the result has been that we have some of the difficulties that we're faced with out there today.

The policy that we put together, the set of recommendations that we made, I think, is important to keep in perspective. As I've often said, this isn't a business where there's a touchdown pass to be thrown, it's three yards and a cloud of dust. You've got to try to deal with various aspects of the problem and it is very complex, multi-faceted, involves not only our sources of electric energy but also, obviously, transportation fuels and many other parts of the total spectrum.

What we've put together places a lot of emphasis on conservation, on renewables, as well as on increasing conventional sources of supply of power in our society.

There's been a lot of talk on the part of some of our critics and many in the press that somehow conservation doesn't matter. That's not true; it does, and we deal with conservation and its contributions, and with renewables and new technologies before we ever get down to the question of how do we increase conventional supplies of energy in our report. Anybody who's looked at the report knows that most of the financial incentives that are in there that are recommended have more to do with conservation and renewables than with increasing -- or providing any kind of subsidy for conventional sources.

So it is a balanced report. It's got, I think, a heavy emphasis on technology, which it should have. We also devote a lot of time in there to talking about the great successes that we've enjoyed over the last 30 years in terms of increasing the efficiency with which we use energy. And that is really one of the great success stories, because I can remember dealing with this problem nearly 30 years ago, back during the Nixon administration, at the time of the Arab oil embargo. And one of the problems we had was that every time we had a 1 percent increase in economic output in the country, it required a 1 percent increase in energy consumption.

We broke that link many years ago now, and the fact is that we've had, over the course of the last 30 years, an increase in our gross domestic product of about 147 percent, I believe; an increase in actual energy consumed of only 42 percent. And we've actually, during that same period of time, reduced the amount of pollutants put into the atmosphere by 31 percent, going in the negative direction. So we've done a much better job on the environment, much better job of being efficient users of energy than ever before in history. That's been true of the last 30 years, and we project that it will be just as true, more so even as we go forward from this point on. So when we talk about forecasts of how much demand there's going to be out there, what needs to be done by way of developing additional supplies, we've built into those forecasts, produced by the Department of Energy, assumptions about continued significant improvement in the rate or the efficiency with which we use energy going forward.

Just as we talk a lot about the demand, there are just a couple of numbers that I like to ask people to keep in mind as we think about the problem. And first of all, it is our assumption, our conservative assumption of what we'll need by way of additional generating capacity over the next 20 years is that we need to build 1,300 new electric generating plants, about 300 megawatts each.

That's better than one a week from now for the next 20 years. The high-end option would be some 1,900 generating plants over that same 20-year period of time.

Now, obviously, if we're going to generate that much additional electricity, there are only certain ways we can go. Today, of course, 52 percent of our power comes from coal-fired facilities, 20 percent from nuclear, about 15 or 16 percent from gas, and the remainder for things like hydro and other, more unconventional, sources. Going forward, if we triple the amount we get from these other sources, nonconventional sources, triple over the next 20 years, it will still only constitute about 6 percent of the total. So if you're going to generate more electric power in this country over the next 20 years, you're going to do it with coal or you're going to do it with nuclear or you're going to do it with gas. Those are really the viable options for the foreseeable future.

Looked at in that fashion, we begin to understand, I think, sort of the nature of the issues that need to be addressed and resolved. So among other things, we think coal ought to continue to be a very important part of the mix. One out of every two homes in America today are fueled by coal-fired electricity. That means we ought to be able to use it. It's cheap, it's plentiful, the infrastructure is there to deliver it and to generate power with it. And of course, there have always been and continue to be environmental concerns, but we've done a lot in terms of cleaning up our coal-burning facilities. And we can do more. And one of the things in the president's plan is a $2 billion spending proposal with respect to clean coal technology for the future.

Second, apart from that, if we talk about gas, that's going to be the preferred fuel, I think, for many of these facilities, partly for environmental reasons. The plans -- or the assumptions were, until the recent significant price run-up in gas, that more than 90 percent of those new plants would be gas-fired. That may change now, given the economics of the marketplace, but it's still going to be very significant.

And clearly, if that's the case, we've got to have the gas. And we've got to be able to explore for it and develop it. We've got to build the pipelines to deliver it. The estimate that we worked with was that we need, given that assumption on power plants and the amount to which the capacity be gas fired, that we'll need about 38,000 miles of new transmission line, gas pipelines over the course of the next 20 years just to get the gas to where it needs to be in order to be able to use it effectively.

Infrastructure plays a very important part here, too. And we've spent a lot of time not only on gas pipelines, but we clearly need to modernize and update and make more efficient our electric power grid.

One of the problems we're faced with various places in the country today is -- it's regional in nature, but there are many places where the problem isn't so much our lack of capacity to generate power as our lack of facilities to be able to move it from where it's produced to where it needs to be. That's part of the problem in California today. So we spent a lot of time on that infrastructure as well too.

The final and third source, of course, is nuclear. When we started this process, there were a lot of concerns expressed in various circles that you can't really talk about nuclear power in a political setting; it's not sound. The conventional wisdom is nobody's willing to look at it. This is a subject now that's been sort of verboten, if you will, in the political arena for a good many years. We looked at it and concluded that that's unfortunate; that it shouldn't be that way; that in fact, there's a lot going to recommend nuclear power; that as I mentioned earlier, one out of every five homes in America today has electricity generated by nuclear power; that it has proven to be an extremely safe industry for us as a nation. We've gotten much better, the technology has improved over time.

We've had a significant increase in the amount of electricity we generate from nuclear in recent years without building any new plants, because there haven't been any licensed in the country in about 25 years, but because we've gotten better at operating those plants, because we're much more efficient than we used to be, because we've shortened the length of time it takes to refuel, developed other management practices that allow us to operate them efficiently and safely.

But if we look at nuclear and the fact that we haven't built any new plants now in over 20 years, a lot of the facilities that are out there need to be re-licensed; they're coming to the end of their authorized life. And so there has to be a process for evaluating which ones ought to be re-licensed, and it needs to be a reasonable process if people are going to plan on continued use of that nuclear power in the future.

And we also need to deal with the waste question. And, of course, we've got the problem today that we've still got spent fuel piling up at reactors all over the country because we've never completed the process of finding a permanent repository for that waste. That's an obligation of the government, and that needs to be addressed as well too.

We put all that together and add to that the final component, of course, that our transportation system is today nearly 100 percent reliant on oil. That may change over time. There are a lot of bright new technologies out there on the horizon; people finding -- looking for new ways to provide energy to our transportation sector. But again, even if you make assumptions about robust progress in the future over the next few years, when we talk about the time frame over the next 20 years, most of our transportation needs are going to be met with petroleum products, and that's not going to change that dramatically either, although we do provide recommendations in our plan to encourage the development of new technologies there, provide tax credits for hybrid automobiles, and so forth.

A final point, and then I'll stop and be happy to take a couple of questions. I think the issue is important enough that clearly we've gotten the country's attention. There's been a lot of focus on it in the last couple of weeks as we've gone forward with the plan. There's a lot of interest in Congress on the subject and out around the country, as there should be. But I would hope that we could get people to understand that the tone of the debate is important here as well, too. That when the president talks about changing the tone in Washington, it's not just about Republicans castigating Democrats and vice-versa. It's also that we get people on different sides of some of the issues can come together and look for common ground and find ways to make progress. Even if you can't agree on everything, there ought to be some things we can agree on.

I had the experience, as I mentioned, the other day -- we have been roundly criticized by many in the environmental community, but I think oftentimes that was sort of a quick reaction without really sitting down to look at the report or to see what we were proposing. We did an analysis, for example, of a 12-point program put forward by the Sierra Club recently. And they haven't been one of our staunchest supporters. (Laughter.) But -- (laughs) -- it turns out that 11 out of the 12 items on their list of recommendations are, in fact, incorporated in our report, places where we've got common ground, where both the Sierra Club and the Bush administration think we ought to go with respect to important segments. Now, I don't want to misrepresent their position. Obviously, there are parts of our plan that they don't agree with.

But the point that needs to be made here, both to the Congress as well as to groups and people all over the country, is that this is an important national problem. It merits our attention. And it's sufficiently important that we ought to respect one another enough to listen to what the other person is saying, to hear the arguments and the debate and to join in a good, solid, substantive debate about these proposals and about this problem and about how we can make progress against it. Even if we can only agree a part of the time, that will be progress. And I think the nation deserves no less.

Thank you very much. (Applause.)

MODERATOR: Well, thank you again, Mr. Vice President. And we have a number of questions and we have a short amount of time, so we're going to move very quickly. And the first comes --

VICE PRESIDENT CHENEY: In other words, you want short answers? (Laughter.)

MODERATOR: Well, I want effective answers, and make them short. (Laughter.)

VICE PRESIDENT CHENEY: Okay, all right. Okay.

MODERATOR: Now, the first issue, the first question comes from California. I think it's one of the tough political questions. The State Chamber wants to know, they say that California ratepayers have seen prices increase from $6 billion a year to $40 billion within the last year. And what programs or plans does the federal government have to help contain or reduce these energy prices?

VICE PRESIDENT CHENEY: We have tried to be as helpful as we can with respect to California. We've responded very aggressively to requests from Governor Davis for those things he's asked us for. We've expedited, for example, the permitting process for building new power plants. That's something they badly needed to do, and that's been done. The president has given orders to cut back on energy consumption at all federal facilities in California to try to reduce to the maximum extent possible the amount of power we drain out of the system.

And, of course, the bottom line, though, is there isn't anything that can be done short-term to produce more kilowatts this summer. I look at California -- and I don't mean to be critical of our friends in California, and in fairness to the governor, the regulatory scheme that was put in place some years ago out there had bipartisan support; people on both sides of the aisle supported it, but it was a seriously flawed scheme. And it, in effect, of course, capped prices at the retail level, forced the utilities to buy power only on the spot market; did a number of other things that have contributed to today's problem.

If I were to be critical in California, it would be that they didn't address it soon enough; that they knew a year ago they had problems; they postponed taking action because all of the action was potentially unpleasant, would have involved price increases, and so forth. The net result is, though, having postponed action and delayed, we're now in a situation where the prices have to go up anyway; where, in effect, you're going to have blackouts this summer, because even as we had this flawed regulatory scheme, we've had demand grow in California with the economy, but no increase in power because nobody built a new plant out there for 10 years. You've also now had the credit rating of the state seriously placed in jeopardy, and spent a significant part of the state's financial surplus trying to cope with these set of circumstances.

Long term, the answer is build more power plants, and that's exactly what they're doing. But they're not going to have enough new capacity online this summer to be able to avoid blackouts. So a lot of it's going to hinge on the weather.

The price question; a lot of people have argued for price controls. We think that's a mistake; that, in fact, part of the California problem today is because they put price caps in a few years ago. And that was -- it always seem like, as some of my colleagues in the Congress are arguing now, the quick, easy solution; do something about prices.

But the problem is, and prices reflect the fact that you've got more demand than you do supply, and if you do anything in the short term that doesn't either increase supply or reduce demand, then it's not a solution; it's adding to the problem.

So the right answer, we think, in California, is basically what's being done now. We'll continue to work closely with the governor and aggressively do anything we can to help in other areas. But ultimately, the solution here is to bring supply into line with demand, and that will solve the problem.

MODERATOR: Well, keeping up with that thought, we hear from Pennsylvania, who wants to know what your assessment is of the congressional outlook for your energy plan, particularly now that they've just shuffled the deck. (Laughter.)

VICE PRESIDENT CHENEY: Shuffled the deck, or stacked it? (Laughter, applause.) The significance, of course, of the switch -- and I've known Jim Jeffords a long time. We served together in the House for many years before I left the Congress, and it -- you know, it's obviously painful for a Republican to have him decide to depart the party, and it will affect certainly the process of the Senate. It changes chairmanships and so forth, and so it can conceivably have an impact.

The basic makeup of the Senate doesn't change, though. The votes are the same, the same 100 senators there tomorrow that were there yesterday, and we think the issues haven't changed any, and that it still, if there was justification for a Republican Senate addressing these issues last week, there is justification for a Democratically controlled Senate addressing them going forward.

We've worked successfully, I think, on the tax legislation. We've got the biggest tax cut in a generation about to take effect; passed the Senate with 12 Democratic votes, 62 to forty-some. We've got a bipartisan bill out of both houses on education, strongly supported on a bipartisan basis. So there's no reason why it has to be a blatantly partisan fight, and I've got a lot of friends on the Democratic side who I think are interested in solving some of these problems, so I think we can make progress. It would be easier if my friend Trent Lott were the majority leader, but that's the breaks.

MODERATOR: All right. Now we move to St. Louis for a question. They -- and I'll sum this up quickly -- they think a lot of people feel that the idea of a crisis is sort of a little trumped-up so that we could get the price of oil up, both for the energy companies and perhaps from some of the countries we buy it from. I think you were very clear, but I'm giving you one more chance to say, "Hell, no."
(Laughter.)

VICE PRESIDENT CHENEY: Right. No, I -- you know, if you're in an aluminum factory in the Northwest where your plant's been shut down and unable to operate this summer because of lack of adequate supplies of hydropower, or you're managing a high-tech factory in Silicon Valley manufacturing complex electronic components and you lose a whole day's production with a five or 10-minute outage in terms of power, or you're a farmer in the far West who needs to irrigate his crops but is having difficulty because of either the lack of electric power or because of the cost, what he has to pay to get the water out of the ground to irrigate the crops, you think it's a serious problem.

And without question, it's spotty. There are places around the country where we don't have any shortage with respect to capacity, no infrastructure problems, no pricing problems at this point. But the difficulties, of course, with California, given its size and importance to the country and the fact that California often is sort of a leader, if you will, of national trends, we hope this is one we can nip in the bud before it affects the rest of the country.

MODERATOR: Good. Now, moving quickly, staying on the schedule. Wisconsin writes that they've been guilty of not building enough facilities and they're going to be in the same kind of fix, except maybe they found out soon enough. They want to know what you guys can do to get FERC to expedite construction on new energy infrastructure. You mentioned in your comments, but I thought you might just be a little more specific about that.

VICE PRESIDENT CHENEY: Right. Yeah, we've challenged -- if you look at the recommendations, 105 recommendations, 20 involve legislation. Those are things that involve tax credits, financial incentives of various kinds as well. But the remaining 80-some, those involve either executive actions or directions to agencies and departments to undertake specific studies and come back to us with particular recommendations in various areas. We clearly need to do a better job with respect to infrastructure and siting. FERC plays a major role there, both with respect to gas pipelines, for example, and as well as power, and it's important that we go forward on that basis.

One of the controversial parts of the plan is the recommendation that we look at the idea of eminent domain to site transmission lines, electric transmission lines. And that authority exists today in FERC for gas lines, but not for electric transmission lines. We think that ought to be the last resort. We'd much prefer to have state and local officials figure out where those lines ought to go. But we do need to get them built. And if we get into the situation where -- and I think this, frankly, has been one of the problems some places around the country, it's easy to stop a project, it's very hard to build one and to have it go forward, partly because of the not-in-my-backyard syndrome.

But this is an area that we're concerned about. We do have recommendations in there to speed up the whole permitting process. The president signed an executive order establishing, under the CEQ in the White House, a unit that specifically will look at these big projects and try to help facilitate the permitting process at the federal level.

MODERATOR: We're going to have two last questions. I'm going to save Missouri to the end because it sort of asks you what should all these people do to help.
But one other question I picked up from a lot of folks is that your study and your recommendations say we need more source, we need to get more natural resources we can convert to power. Are we going to do anything with some of the places where we have sanctions now, and maybe we could build a little power relationship going forward to increase our supply?

VICE PRESIDENT CHENEY: We have asked the State Department to review our sanctions policy. It does have an impact -- places like Libya, Iran, Iraq. But there are policy reasons, clearly, why those sanctions were imposed.

Now, I made speeches, when I was still in the business world and a member of the Dallas Chamber of Commerce, about the problems with unilateral economic sanctions. I think they oftentimes discriminate against American firms and don't really achieve the desired policy result.

But we do have some special circumstances around the country that happen to be in those energy-producing areas where sanctions are currently in force. And there's going to have to be some other change in the climate, in the environment over there and the conduct of those governments, I would think, before Congress is going to be comfortable lifting those sanctions. But we are looking at it. The president believes we ought to look at provisions; for example, some sunset sanctions so that they have to be readdressed periodically; they don't just get put on and left on indefinitely.

MODERATOR: Now, with all due respect to the Missouri State Chamber, I'm fixing their question up a little bit so we can use that as an exit question.
What can the people in this audience and the people watching you around the country do to help generate more power, get us into nuclear, get many of the things from your report and recommendations to happen?

VICE PRESIDENT CHENEY: I think it's important to engage in the debate, to get your local organizations actively looking at and considering these issues. I only touched on the surface of a lot of things out there we need to talk about. There's the whole debate over the question of global climate change. There are strong arguments to be made in terms of looking at what we want to have by way of energy infrastructure with respect to what impact it might have there.

One of the arguments for nuclear power is no carbon dioxide emissions. There's the debate over ANWR, whether or not we ought to open up the Alaskan National Wildlife preserve to oil and gas development, which we recommend; we think it ought to be done.
Those are going to be hot issues, contentious issues, and we ought to go ahead and engage in them.

I would urge Chambers around the country to contact your congressman and your senator. The thing that had the biggest impact on me when I was a member of Congress was hearing from somebody at home who knew something about the issue, who was affected by it, and that counted for a lot more than having somebody pound on my door in Washington who wasn't from my district. So talk to your congressman and senators. You can have an enormous impact on their views.

MODERATOR: Mr. Vice President, two sentences: one, thank you for coming, thank you very much for doing this important work, and this Chamber and the Chambers all around the country have got this at the top of their list. If we don't have the power, we don't have anything else to do what we have to do to run the American economy, so you'll have our support. We
appreciate the work you've done and we really appreciate you coming today.

VICE PRESIDENT CHENEY: Thank you, Tom. (Applause.)

END

Remarks by the Vice President at the U.S. Chamber of Commerce Rally Supporting the
Bush Administration's Energy PlanRemarks by the Vice President at the U.S. Chamber of Commerce Rally Supporting the
Bush Administration's Energy Plan